Friday, July 24, 2009

"Borderline" Ocean Park

Here are some interesting current samples from what's called the Borderline Neighborhood of Ocean Park, the southern edge next to Venice, west of Lincoln Blvd.

First is 606 Marine St. (photo above, click to enlarge), a 2 bedroom / 1 bath 686 SF house (built in 1912) on a 3,197 SF lot, listed 6/2/09 for $699K.

"REDUCED! Owner is motivated...make your offer! Totally vacant new owner can set the rental price for this 1 bed/1bath DUPLEX on great Santa Monica area; walk to the beach, to the Main St. Farmer's Market, the shops. Bungalows need work or just build your dream home!"

Its next-door neighbor on the right (the pink one), 604 Marine St., 1 bed / 1 bath, 588 SF on 3,192 SF lot, was listed from 2/11/09 to 7/9/09 for $799K before being withdrawn.

"Cozy cottage in great location with Santa Monica schools. Needs cosmetic work. Guest house in back. Does not show well do to several people living on the property. Lowest price in Santa Moncia west of Lincoln. No brokers opens and showings by appt.only with 24 hours notice. Property will be delivered vacant. Great buy!!!!"

Guess not!!!! Did the newer listing get its price right at $100K less, for a bedroom and 100 SF more, and apparently in better condition?

"Charming, very livable 1920's beach cottage. Same owner for 60+ yrs. Bathroom remodeled with corian counter tops and has separate tub and shower. Kitchen also redone about 20yrs ago. Owner added family room with river rock fireplace. A true diamond in the rough! Trust sale that does not require court approval. This is the quintessential condo alternative!"

Finally is 809 Ozone St. a 3 bed / 2.5 bath 2,161 SF house (built in 1991) on a 2,666 SF lot, listed 7/8/09 for $1,370K. That seems pretty steep for the second house from the car lot on the corner of Lincoln Blvd.

The place on ozone was for rent a few month ago for ~5500, if I recall correctly. I am starting to see several places that were for rent and now have come up for sale.

If I had to guess, some that thought they could hold out and rent, found out that market rent will not cover the payment and now they are trying to sell. They will soon find out that the losses will be larger if they sell now. I ate to repeat what may have said for a year now but, the longer it takes for them to come down to market, the worse it will be.

This is why it takes years for real estate to correct. We still have a ways to go.

The area is barely Santa Monica, and not that great. Buy here at your own investment risk. Following the 'location' cardinal rule of R/E, it is better to live in a good LA neighborhood than a bad SM one. These listings will tank.

This area is full of rent control lifers who had cockroach credit 20-30 years ago and could not get into the better parts of Santa Monica. Nothing has changed on the cockroach status, and god forbid if your hedge obstructs their light or view, or if you are in TORCA conversion with the hold-outs. Definetely sub-Monica, and perhaps the only place in the city other than Pico gangland where cars parked on the street have Clubs on the steering wheels.

Was Santa Monica known as a rent control haven back in the 60s/70s? As Midwesterners, we did know that New York City had rent control, but all we ever heard about Southern California was that it was too expensive to live out here, that homes cost so much more, that rents were sky high, etc. etc. That too many young ones got off of Greyhounds in search of fame but became homeless, etc.

But once here, I was surprised by the extent of rent control in the area -- not only in Santa Monica but also in L.A., West Hollywood, etc.

This rent control availability, IMO, is probably the L.A. area's best kept secret of all.

First off, NYC has rent stabilization, not rent control - big difference. Second, rent control in SM only lasts until the tenant on the lease vacates - then the unit becomes market rate. The landlord strategy in SM is simple - wait for all the rent control tenants to leave or die, then get a fair return on your investment.

Ozone, Navy, and Marine are low-end Ocean Park but better than some other parts of Santa Monica. They are also more about single-family houses - including a number of tall new ones - than most of Ocean Park.

So, you graduate from high school or college in the late 70s/early 80s, get your rent control SM apartment and job in the area, and as time goes on buy a property in a nearby not-rent controlled/stabilized city.

Now, 3 decades later around 50 years of age, you retire early, still with your rent control but laughing at those "Borderline" Ocean Park shack buyers.

Now, 3 decades later around 50 years of age, you retire early, still with your rent control but laughing at those "Borderline" Ocean Park shack buyers.

The situation above is not typical of the borderline rent control crowd. More likley than not their ambition has never exceeded their rent, and now they getting older looking for CCSM (Community Corp) to build them nicer digs or a retirement home. We are talking about a low-prosperity and under-performing group here, with the only point of pride being when they work the rent control board in their favor.

Owners have complete gallows humor about their aging rent control tenants, like fingers crossed during flu season and the comfort of knowing older legs can't keep going up 3 flights of stairs. Sorry to be harsh, but rent control is the reason why the multi buildings in the city are crappy eyesores full of crappy attitudes. Give it another 20 years to flush out, then there is a chance to have a great sea-side city.

I agree that a lot of the houses are rotting eyesores due to rent control, but you have to admit that this is a super location, easy walking distance from everything, and zoned single family so it can develop into something when the freeloaders and old timers pass out of the picture. Note all the new construction in the area before the economic mess. It can happen again and every boom time will result in a betterment of the housing stock.

"but you have to admit that this is a super location, easy walking distance from everything, and zoned single family so it can develop into something"

West of 4th street is easy walking distance to the things you really want to go to, unless Lincoln has a special charm we don't know about. The development angle is a sucker's bet; neighboring rent control people fight tooth and nail over view, landscaping, building height, window locations, etc on sloped lots. Renters 2 blocks away will show up at planning reviews to claim your lights will shine in their windows and your proposed height will ruin the enjoyment of their existing view. This area is lower priced for a reason, and relatively high risk as a sure-bet investment.

These are all losers, I know the area and it's full of rent control lifers who let their properties rot and invite the homeless and cockroaches in. It's a blight on Santa Monica, and will remain so until the powers that be stop catering to the marginal members of society and start paying attention to those who are working hard, raising families and paying lots of taxes.

If you build without seeking variances, there are no meetings for the lifers to attend. There are a lot of new houses in the area that managed to get built. Lincoln is not as bad as some think and actually has a lot to offer for the less timid. You can walk to the same places those west of 4th street can walk to. The small lots make for the low prices and allow a pretty good upside.

What is killing the near-Lincoln area for new architecture is the hodge-podge of new construction - a lot of the 'modern' or 'green' stuff going up is not good, done on the cheap with poor design.

There is a reason why the Kappe house is up on the hill, and you won't see an Ehrlich type design or Marmol Radziner pre-fab going in the near-Lincoln area any time soon. Spending an extra $100-200k for a lot higher on the hill or a different part of SM/Venice is a sound strategy.

Efficiency and progress is ours once more Now that we have the Neutron bomb It's nice and quick and clean and gets things done Away with excess enemy But no less value to property No sense in war but perfect sense at home:

The sun beams down on a brand new day No more welfare tax to pay Unsightly slums gone up in flashing light Jobless millions whisked away At last we have more room to play All systems go to kill the poor tonight

We can get maximum bang for the buck by starting an outdoor feeding program on Delaware, complete with a Big Blue shuttle service. Heck, on the scheduled day I will hold my nose and drive 2-3 guys living in my alley over as a public service. Oh happy day!

Gang activity has been prevalent for decades in the Pico neighborhood, particularly the portion of the area running roughly from 14th Street to just east of Cloverfield, and between Pico Boulevard and Colorado Ave.

NYC had strict rent control from WWII until some time around 1970. Rents did not change when tenants changed. I can't recall, but I think there was no cost-of-living adjustment either. Landlords could increase rent by the amortized cost of improvements. The system was brutal on landlords and administered by a City agency whose guiding principle was "the tenant is always right."

Around 1970, strict rent control in NYC was phased out (as current tenants vacated) and was replaced by rent stabilization. New leases could be at market rates, but renewals for 1, 2 or 3 years were at fixed percentage increases set every year by a rent board.

Santa Monica followed the NYC progression of rent controls, starting with strict rent control in 1979. The California legislature finally banned strict rent control in 1996, leading to the a system of vacancy decontrol.

If a building's tenants are mobile because of their jobs and the apartments turn over frequently, a landlord can do okay under a vacancy decontrol system. If the same tenants stay for decades, the landlord will eventually fall behind.

The rent control lifers slow down the gentrification process. When the economy is strong, a landlord in a transitional area can upgrade an empty apartment and attract a higher paying, and more mobile, tenant. When the economy is weak, the same landlord runs a greater risk of locking in a long term rent starting at a lower base.

I was told that 606 Marine is in the historic Ocean Park area and a new owner will not be able to tear down the property as the ad suggests.

I don't believe it is within the Ocean Park historic district around 3rd Street. If a demolition permit is filed the Landmarks Commission could determine it historic, but the City Council has set a pretty high standard in what it has approved and denied.

This area isn't part of the Ocean Park Historic District. While there are some decent places in this area (especially further west from Lincoln), that damn hill becomes a pain in the ass after a while if you like to go for a walk or bike ride.

I understand your points and they are well taken but know that the neighbors have and will continue to participate in making the Borderline Neighborhood a lively, viable, safe and friendly place to live and play. In the last 10 years the neighbors have collaborated to:

Reduce crimeImprove the infrastructureEmbrace its diversityEstablished the BNG neighborhood groupHosted community eventsReduced impacts from the businessesForged relations with the City Established a neighborhood watchImproved the streetscapeCleaned up the taggingAnd generally improved the quality of lifeetc.

This is a neighborhood where people know their neighbors. People are on the street walking dogs and pushing baby carriages. It has a park with new improvements. It is place where residents say hello and wave at each other. It is also a community where the residents are active in mitigating problems or difficulties with activity that has historically brought blight to the area. It is a great community to be a part of and invest in. I personally have invested enormous amount of time and money to ensure this is a place I want to live.

In the last 10 years the Borderline Neighbors have collaborated to mitigate and improve the standard of living in the Borderline Neighborhood by:

Forming the BNG (Bornerline Neighborhood Group)Establishing a mission statementEmbracing the diversity of the areaMaking infrastructure improvementsIncreasing and hosting social activitiesProducing regular newslettersEstablishing a neighborhood watch Improving the lightingReplacing treesReplacing aging sewersMitigating negative impacts from adjacent businessesWorking with the Police Department to actively reduce crime and criminal behaviorImproving the streetscapeCoordinating efforts with other neighborhood groups on common issuesParticipating and commenting on policy documents such as the LUCE, Lincoln Blvd relinquishment, bus stops improvements, the bicycle plan, and other policies to ensure a voice in those documents that will benefit BNGCreating a neighborhood identityPromoting sustainabilityPromoting neighbor to neighbor interactionDiscouraging poor behavior that would blight the neighborhoodetc. etc.

In short this is a good neighborhood that a great place to raise children as it has access to parks and schools, is walkable, is sustainable, and has an urban and human fabric that is stable incorporating all income classes.

As a person who for over 10 years has coordinated with a great number of my neighbors to make all of the above happen, I think Mr./Ms. Anonymous' depiction of Borderline is a bit out of date.